Myth: As a subcontractor, you can’t secure or perfect your lien rights if the prime contract between the general contractor and owner forbids construction notices or mechanics liens.
Truth: In many states, it is unconstitutional and unenforceable to contractually waive your lien right. Now, in some states, certain suppliers or contractors may not have a statutory lien right, but that’s a different issue. We’re talking about contractually having your lien rights waived.
Can it happen? Maaaybe, but there could be a significant amount of legal hoops that would be jumped through, attorneys involved, and possibly a performance bond may be required in lieu of a right to lien.
If a GC tells you there are no lien rights on this project (again, not statutorily admissible in most states on private projects), be sure to ask the GC for their payment and performance bond. If they state they don’t have one, then the natural question is this:
What kind of security and assurances do we have that we will get paid on this project if there is no bond and/or “no lien right”?
Every year, we are asked by our subcontractor clients if their lien right can be contractually waived by a general contractor. This is not all that uncommon – how you address it relies on several factors:
1) What does your attorney advise?
2) What protections are in place for the value of your work?
It’s like waiving the right to prosecute someone who crashed your car and drove off. If the driver is later found and says , “please waive your right to prosecute me” and you agree, does that make the offense any less enforceable? Of course, not – as always, if someone is claiming you don’t have a lien right or the contract forbids it, please contact your construction attorney immediately. There may be other red flags to identify also.